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6 Aug 2014

Liberal Director Brian Loughnane Knew About Illegal Donations

By Kate McClymont and Michaela WhitbournThe federal Liberal Party is embroiled in a widening corruption inquiry after evidence was tendered suggesting the party's director, Brian Loughnane, knew federal channels were being used to subvert NSW laws banning political donations from property developers.

Abbott chief of staff Peta Credlin

redlin

The Independent Commission Against Corruption resumed public hearings on Wednesday in Operation Spicer, its inquiry into Liberal Party fundraising. In an explosive two-hour opening address, counsel assisting the commission, Geoffrey Watson, SC, said there was evidence the federal party was willing to be used "as a means of washing and re-channelling donations made by prohibited donors" before the last state election.The inquiry also heard "serious irregularities" had been uncovered in the way the NSW Liberals funded their successful 2011 campaign for the state seats of Newcastle and Charlestown. The allegations prompted the sitting Liberal MPs Tim Owen and Andrew Cornwell, who was the Baird government's chief whip, to step aside from the party and join the cross bench.The ICAC heard former Liberal police minister Mike Gallacher and former energy minister Chris Hartcher were aware of arrangements to subvert the NSW ban on developer donations, and Mr Gallacher "suggested some of them".Tens of thousands of dollars in illegal donations were allegedly taken from property developers including Nathan Tinkler's Buildev group and Jeff McCloy, who later became Newcastle mayor and allegedly gave Mr Cornwell $10,000 in cash during a clandestine meeting in his luxury Bentley. Mr McCloy denies the claims but Mr Cornwell has told the ICAC in private that he gave the money to the Liberal Party.In a sensational twist, the inquiry heard Mr Owen's campaign manager Hugh Thomson had rolled over and was assisting the commission in return for an indemnity against prosecution.An email shown at the commission suggests Mr Loughnane may have been aware of potential arrangements for donations from property developers - which have been banned in NSW since 2009 - to be made to the federal party to subvert the donations ban.

Liberal Party Director Brian Loughnane

“Brian Loughnane has agreed that for the time being the Fed Sec will operate on the policy … in effect, there is no benefit for a NSW donor to donate via the Fed Sec, unless they are a property developer,” said federal Liberal executive Colin Gracie in a 2010 email to Simon McInnes, the finance director of the NSW Liberal party. Mr Loughnane's wife Peta Credlin is Prime Minister Tony Abbott’s chief of staff. He did not respond to requests for comment.But NSW Liberal Party state director Tony Nutt disputed the context of the email on Wednesday, saying that the comments were made during a discussion about a potential donation by a non-developer to a federal seat, where the ban does not apply.The inquiry heard separate allegations that members of the Liberal Party subverted the donation laws by diverting money through an alleged Canberra-based front known as the Free Enterprise Foundation, before sending it back to the NSW branch to use in the 2011 State election.Mr Watson said that “there is evidence that the use of the Free Enterprise Foundation in this fashion was known at high levels of the Liberal Party''.Mr McCloy and prominent developer Hilton Grugeon face allegations they made illegal donations to the Liberals during the 2011 election campaign and disguised some of the donations using "sham" invoices.Mr Watson said Mr Cornwell has been "helpful" to the commission and while his actions "may have been unwise, it would seem to us that those actions may have been the product of a degree of inexperience in the face of high pressure tactics from some determined characters".He added there was "no evidence" Mr Cornwell favoured the interests of Mr McCloy or Mr Grugeon.Mr Watson said Mr Owen, who announced in May he would not recontest the next election, "might be in the same class" and he was "surrounded by persons who were not pure".The inquiry heard embattled coal mogul Nathan Tinkler's property development group, Buildev, would get "quite a mention in this inquiry".The ICAC will also examine whether former Labor treasurer Eric Roozendaal and his corrupt former colleague Joe Tripodi "improperly took steps" to benefit Buildev while in government.Mr Watson has predicted potential problems for Mr Tripodi, saying that "attempting to influence a person to give false evidence is a serious offence".

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